CAP S.A. 'BB' Ratings Placed On CreditWatch Positive On Higher Prices And Stronger Operating Performance

Consistently higher iron ore prices, along with CAP's improved operating efficiency and lower capex, are likely to bolster the company's credit metrics and liquidity in the next 12-18 months. We have placed our 'BB' ratings on Chile-based steel and iron ore producer on CreditWatch with positive implications. The positive CreditWatch listing reflects that an upgrade is possible in the next 90 days if we believe the company will maintain stronger credit metrics, such as debt to EBITDA below 3x, funds from operations (FFO) to debt of 30% and free operating cash flow (FOCF) to debt of around 15%, on a consistent basis and even amid volatile iron ore prices. Maintaining such metrics will depend on the company's financial policy, capex

...+ Consistently higher iron ore prices, along with CAP's improved operating efficiency and lower capex, are likely to bolster the company's credit metrics and liquidity in the next 12-18 months. + We have placed our '##' ratings on Chile-based steel and iron ore producer on CreditWatch with positive implications. + The positive CreditWatch listing reflects that an upgrade is possible in the next 90 days if we believe the company will maintain stronger credit metrics, such as debt to EBITDA below 3x, funds from operations (FFO) to debt of 30% and free operating cash flow (FOCF) to debt of around 15%, on a consistent basis and even amid volatile iron ore prices. Maintaining such metrics will depend on the company's financial policy, capex plan and cushion to sustain a low leverage during industry downturns. SAO PAULO (S&P Global Ratings) Jan. 18, 2017--S&P Global Ratings has placed its '##' corporate and issue-level ratings on CAP S.A. on CreditWatch with positive implications. The CreditWatch...

Ratings Action